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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005.

 

Commission file number 000-22150

 

LANDRY’S RESTAURANTS, INC.

(Exact name of the registrant as specified in its charter)

 

DELAWARE

(State or other jurisdiction of

incorporation of organization)

 

76-0405386

(I.R.S. Employer

Identification No.)

 

1510 West Loop South, Houston, TX 77027

(Address of principal executive offices)

 

(713) 850-1010

(Registrants telephone number)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No ¨

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

AS OF May 5, 2005 THERE WERE

22,382,933 SHARES OF $0.01 PAR VALUE

COMMON STOCK OUTSTANDING

 



Table of Contents

LANDRY’S RESTAURANTS, INC.

 

INDEX

 

          Page
Number


PART I. FINANCIAL INFORMATION     

Item 1.

   Financial Statements    2
     Condensed Consolidated Balance Sheets at March 31, 2005 (unaudited), and December 31, 2004    3
     Condensed Unaudited Consolidated Statements of Income for the Three Months Ended March 31, 2005 and 2004    4
     Condensed Unaudited Consolidated Statement of Stockholders’ Equity for the Three Months Ended March 31, 2005    5
     Condensed Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2004    6
     Notes to Condensed Unaudited Consolidated Financial Statements    7

Item 2.

   Management’s Discussion and Analysis of Financial Condition and Results of Operations    18

Item 3.

   Quantitative and Qualitative Disclosures About Market Risk    21

Item 4.

   Controls and Procedures    22

PART II. OTHER INFORMATION

   23

Item 1.

   Legal Proceedings    23

Item 2.

   Unregistered Sales of Equity Securities and Use of Proceeds    23

Item 6.

   Exhibits    24

Signatures

   25

 

1


Table of Contents

 

LANDRY’S RESTAURANTS, INC.

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

 

The accompanying condensed unaudited consolidated financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting only of normal recurring entries) necessary for a fair presentation of our results of operations, financial position and changes therein for the periods presented have been included.

 

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws. Forward-looking statements may include the words “may,” “will,” “plans,” “believes,” “estimates,” “expects,” “intends” and other similar expressions. Our forward-looking statements are subject to risks and uncertainty, including, without limitation, our ability to continue our expansion strategy, our ability to make projected capital expenditures, as well as general market conditions, competition, and pricing. Forward-looking statements include statements regarding:

 

    potential acquisitions of other restaurants, restaurant concepts and lines of businesses in other sectors of the hospitality and entertainment industries;

 

    future capital expenditures, including the amount and nature thereof;

 

    business strategy and measures to implement such strategy;

 

    competitive strengths;

 

    goals;

 

    expansion and growth of our business and operations;

 

    future commodity prices;

 

    availability of food products, materials and employees;

 

    consumer perceptions of food safety;

 

    changes in local, regional and national economic conditions;

 

    the effectiveness of our marketing efforts;

 

    changing demographics surrounding our restaurants;

 

    the effect of tax laws and any changes therein;

 

    same store sales;

 

    earnings guidance;

 

    the seasonality of our business;

 

    weather and acts of God;

 

    food, labor, fuel and utilities costs;

 

    plans; and

 

    references to future success.

 

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate, and, therefore, we cannot assure you that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in our forward-looking statements, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved.

 

2


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LANDRY’S RESTAURANTS, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

     March 31,
2005


    December 31,
2004


 
     (Unaudited)        
ASSETS                 

CURRENT ASSETS:

                

Cash and cash equivalents

   $ 132,437,088     $ 201,394,032  

Accounts receivable - trade and other

     17,242,198       18,595,531  

Inventories

     52,855,624       55,004,153  

Deferred taxes

     11,307,212       10,859,160  

Other current assets

     10,101,775       11,630,527  
    


 


Total current assets

     223,943,897       297,483,403  
    


 


PROPERTY AND EQUIPMENT, net

     1,012,924,563       1,007,296,936  

GOODWILL

     18,527,547       18,527,547  

OTHER ASSETS, net

     47,206,741       21,644,385  
    


 


Total assets

   $ 1,302,602,748     $ 1,344,952,271  
    


 


LIABILITIES AND STOCKHOLDERS’ EQUITY                 

CURRENT LIABILITIES:

                

Accounts payable

   $ 48,044,096     $ 48,341,318  

Accrued liabilities

     93,091,294       84,955,488  

Income taxes payable

     830,095       971,175  

Current portion of long-term notes and other obligations

     1,703,612       1,700,496  
    


 


Total current liabilities

     143,669,097       135,968,477  
    


 


LONG-TERM NOTES, NET OF CURRENT PORTION

     557,902,431       559,545,092  

DEFERRED TAXES

     14,369,582       13,343,631  

OTHER LIABILITIES

     36,029,057       35,198,105  
    


 


Total liabilities

     751,970,167       744,055,305  
    


 


COMMITMENTS AND CONTINGENCIES

                

STOCKHOLDERS’ EQUITY:

                

Common stock, $0.01 par value, 60,000,000 shares authorized, 23,706,933 and 25,607,573, shares issued and outstanding, respectively

     237,070       256,076  

Additional paid-in capital

     366,361,861       401,228,736  

Deferred stock compensation

     (6,961,796 )     (4,281,670 )

Retained earnings

     190,995,446       203,693,824  
    


 


Total stockholders’ equity

     550,632,581       600,896,966  
    


 


Total liabilities and stockholders’ equity

   $ 1,302,602,748     $ 1,344,952,271  
    


 


 

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

 

3


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LANDRY’S RESTAURANTS, INC.

 

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

     Three Months Ended March 31,

     2005

   2004
Restated


REVENUES

   $ 281,344,585    $ 275,676,487

OPERATING COSTS AND EXPENSES:

             

Cost of revenues

     78,583,533      77,719,512

Restaurant labor

     83,532,423      80,932,363

Other restaurant operating expenses

     69,996,905      64,697,802

General and administrative expenses

     13,686,407      16,407,130

Depreciation and amortization

     14,755,204      13,031,197

Asset impairment expense

     —        1,708,654

Restaurant pre-opening expenses

     919,521      1,854,044
    

  

Total operating costs and expenses

     261,473,993      256,350,702
    

  

OPERATING INCOME

     19,870,592      19,325,785

OTHER EXPENSE (INCOME):

             

Interest expense, net

     8,565,599      3,073,796

Other, net

     455,691      162,753
    

  

Total other expense

     9,021,290      3,236,549
    

  

INCOME BEFORE INCOME TAXES

     10,849,302      16,089,236

PROVISION FOR INCOME TAXES

     3,471,777      4,987,663
    

  

NET INCOME

   $ 7,377,525    $ 11,101,573
    

  

EARNINGS PER SHARE INFORMATION:

             

BASIC

             

Net income

   $ 0.30    $ 0.40

Weighted average number of common shares outstanding

     24,600,000      27,600,000

DILUTED

             

Net income

   $ 0.29    $ 0.39

Weighted average number of common and common share equivalents outstanding

     25,500,000      28,500,000

 

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

 

4


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LANDRY’S RESTAURANTS, INC.

 

CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

 

     Common Stock

                         
     Shares

    Amount

   

Additional
Paid-In

Capital


    Deferred Stock
Compensation


    Retained
Earnings


    Total

 

Balance, December 31, 2004

   25,607,573     $ 256,076     $ 401,228,736     $ (4,281,670 )   $ 203,693,824     $ 600,896,966  

Net income

   —         —         —         —         7,377,525       7,377,525  

Dividends paid

   —         —         —         —         (1,280,269 )     (1,280,269 )

Purchase of common stock held for treasury

   (2,006,200 )     (20,062 )     (37,748,269 )     —         (18,795,634 )     (56,563,965 )

Exercise of stock options and income tax benefit

   5,560       56       82,394       —         —         82,450  

Issuance of restricted stock

   100,000       1,000       2,799,000       (2,800,000 )     —         —    

Amortization of deferred stock compensation

   —         —         —         119,874       —         119,874  
    

 


 


 


 


 


Balance, March 31, 2005

   23,706,933     $ 237,070     $ 366,361,861     $ (6,961,796 )   $ 190,995,446     $ 550,632,581  
    

 


 


 


 


 


 

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

 

5


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LANDRY’S RESTAURANTS, INC.

 

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Three Months Ended March 31,

 
     2005

    2004
Restated


 

CASH FLOWS FROM OPERATING ACTIVITIES:

                

Net income

   $ 7,377,525     $ 11,101,573  

Adjustments to reconcile net income to net cash provided by operating activities:

                

Depreciation and amortization

     14,755,204       13,031,197  

Asset impairment expense

     —         1,708,654  

Change in assets and liabilities, net and other

     13,152,440       (15,696,162 )
    


 


Total adjustments

     27,907,644       (956,311 )
    


 


Net cash provided by operating activities

     35,285,169       10,145,262  

CASH FLOWS FROM INVESTING ACTIVITIES:

                

Property and equipment additions

     (20,317,587 )     (29,758,550 )

Proceeds from sale of property and equipment

     —         1,470,000  

Business acquisitions and related payments, net of cash acquired

     (25,484,613 )     (179,857 )
    


 


Net cash used in investing activities

     (45,802,200 )     (28,468,407 )

CASH FLOWS FROM FINANCING ACTIVITIES:

                

Purchase of common stock for treasury

     (56,563,965 )     (1,538,113 )

Proceeds from exercise of stock options

     53,000       628,402  

Payments of debt and related expenses, net

     (648,679 )     (522,834 )

Proceeds (payments) on credit facility, net

     —         (4,000,000 )

Dividends paid

     (1,280,269 )     (691,497 )
    


 


Net cash provided by (used in) financing activities

     (58,439,913 )     (6,124,042 )
    


 


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     (68,956,944 )     (24,447,187 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

     201,394,032       35,211,319